2

The Stages: From Bystander to Fully Committed

0%

Bystanders

None to initialinvestigationof offshore'spotential

None

50% to 60% ofFortune 1,000companies

Experimenters

Small 10- to 20-person projectsfor conversionof older appsor isolated newdevelopment

Uncoordinatedproject-by-projectmanagement

1% to 5%

25% to 30% ofFortune 1,000companies

Committed

30- to 50-personmission criticaldevelopmentand maintenanceprograms

Centralizedand dedicatedprogrammanagement

10% to 30%

5% to 10% ofFortune 1,000companies

Full exploiters

Large scale appsdevelopment andmanagement,remote monitoringand administration,implementation and upgrades ofpackaged apps,and BPO

Global sourcing isa core competencewith documentedbest practices

40% to 50%

3% to 5% ofFortune 1,000companies

Stagecharacteristics

Focus of efforts

Level of programmanagement skills

Percentage of ITservices budgetgoing offshore

Size of segmenttoday

3

Which IT Functions Are Going Offshore?

79%

54%

36%28% 26%

21%16%

0%

25%

50%

75%

100%

4

Risks that Require Mitigation

Cultural issues and/or clash Communication challenges Language barriers Distance to vendor Time zone differences (can be a plus as well as a minus) Political instability General infrastructure of the country Management challenges Security

5

Critical Success Factors

Governance Senior executive

sponsorship Internal and external

communications Vendor selection

process Project selection

process Disciplined

requirements definitions

Active relationship management

Contingency planning Significant onshore

presence in early stages Understand and focus on

cultural issues Measure performance,

success Focus on the value rather

than just the cost savings Know the market!!

6

What Did Our Stakeholders Say? The Concerns

Stanford will lose control by giving away its institutional knowledge. Core competency vs. Commodity

Maintenance is much different than development projects. Has Stanford established a process or considered the differences?

Stanford needs to improve skills (esp. writing specifications and documenting requirements)

Stanford staff will resist required behavior change to make this successful (for instance, responding to vendor in timely manner)

7

Wipro staff is excellent, Stanford will be able to learn from them to improve service and quality levels

Specification writing and requirements communication is not a problem when business analysts are skilled and trained

Wipro has been able to accommodate Stanford feedback to improve the specification writing and business requirements development process

Outsourcing will be worth it if we can do IT better, faster and cheaper

What Did Our Stakeholders Say? The Positives

8

What did our staff say?The positives Excellent client service

Refined system development methodology

Rigor and discipline in interactions

Excellent communication mechanism

Professional

Effort to partner is clear

Use of metrics key to operation

9

What did our staff say?The concerns Challenging contract negotiations

Decentralized business processes make requirements and spec writing difficult

Fast turnaround requirements for docs and sign-off

Unfamiliar with Stanford business processes

Business analysis not as thorough because they don’t have the big picture

Lack of experience with student administration modules

10

Best Bets: What to Outsource/OffShore

Projects with well defined requirements

Development projects with complete specifications

Be sure to bound scope of work and manage scope creep

Stable applications

Back-room applications, those with insignificant end-user interaction

Applications that do not require real-time collaboration with offshore team

11

Currently Under Consideration

OFFSHORE CANDIDATES DBA Services Application

Administration Middleware

Administration Development and Coding Junior System

Development Application Maintenance Reporting Services Technical Documentation

OUTSOURCE CANDIDATES Storage Hosting Desktop Management System Administration Web Services Monitoring Network Administration Pager Services User Training

12

Governance Roles and Relationships

Steering Committee Define overall

strategy Establish IT,

business, HR, legal, audit, and compliance support

Charter program office

Program office

Vendor management

Reporting/metrics Best practices

database IT staff competency

plan Communications

Stages in offshore life cycle Due diligence Negotiations Transition Project management

13

Human Resources and Communication Considerations

Keep internal staff informed through one clear and consistent message

Work with HR on strategies to retain and/or develop staff for new roles, as needed

Communication plans for end-users and for staff members are essential

14

Final Words

Do not be an absentee landlord!!!! Outsourcing does not mean abdicating responsibility

Do not lose control: knowledge is the key

Establish communication processes and communicate; including road shows

You’re never going to master the offshore game unless you realize that mastering it means relentless adjustment and continuous learning

Manage expectations